The $9.6bn judgement debt

The court judgment of $9.5 billion against Nigeria by a United Kingdom court for its inability to perform subsisting contract between the both parties continues to elicit reactions and controversy. In a judgment against the nation, the Process and Industrial Developments Ltd (P&ID) has been given the right to seize $9.6 billion in Nigerian assets. The sum, which is about 20 per cent of the country’s external reserves of $45 billion, makes the judgment a product of the inability of our government to keep faith with the contractual terms with the existing Gas Supply and Processing Agreement (GSPA).

In 2010, both parties had signed the agreement such that P&ID would build a state-of-the-art gas processing plant that would convert wet gas to dry gas and supply same to the national grid at no extra cost to the country while the federal government would lay pipelines and supply gas to the plant. In the deal, the company was to make its invested funds through the exportation of byproducts of the wet gas over a period of 20 years. Reports indicated that the government failed to lay required pipes, making it impossible for P&ID to build the plant, as agreed. This brought about the dispute that made the company to accuse Nigeria of breach of contract and depriving it of opportunity to earn a profit, as building the plant was contingent on the government laying the pipes.

In keeping to the terms of the contract, the company had opted for arbitration and a settlement was reached in 2015 in which Nigeria agreed to pay $850 million. Unfortunately, Nigeria did not adhere to the terms of the arbitration, making P&ID to resort to arbitration and in 2017 whereby the arbitration tribunal ruled in favour of the company and ordered Nigeria to pay for the value of the profits which P&ID would have earned from March 2013 with interest. Despite this, the government reneged by forcing the company to approach a commercial court to seek an enforcement of the tribunal’s ruling, which culminated in making the court to rule that Nigeria had erred in the handling of the matter and should, therefore, pay $9.6 billion to the company.

Matters arising from the case suggest that there are many faults on the part of the government. For instance, representatives of government were accused of not being in court when required or refused to follow up on negotiated out of court settlements. These amounted to costly legal mistake as the judgment is capable of making the country to lose a huge amount of 20 per cent of its external reserves, which is about 2.5 per cent of the nation’s Gross Domestic Product (GDP). Furthermore, rather than correcting the mistake, retrogressive actions were taken by the country and the suit, which lasted for more than four years, had a ruling against Nigeria that it was liable to the P&ID. This judgment was never contested.

The following knotty questions deserve answers: why did public officials offer to give up jurisdiction clause to overseas interests and by so doing, externalise the choice of law in contracts to be executed within local jurisdictions? Could this be deliberate so as to put the nation at a disadvantaged position? Was the deal meant to be a failed venture ab initio? What were the obligations and limitations of the parties? What is the actual amount that the firm invested in Nigeria on the contract? Where is the office of the firm located in the country? Who are the personnel and principal officers of the firm in Nigeria? These are questions that deserve concrete explanations in line with the statutory requirements for foreign participation of business in Nigeria.

As a way forward, the government should explore every legal means to resolve the dispute further delay. This becomes crucial in view of insinuations by government that the judgment debt was a calculated attempt by international and local scammers to deplete the country’s rising foreign reserves, just as the Attorney-General and Minister of Justice, Abubakar Malami (SAN), had rejected claims by P&ID that he was culpable for causing a delay that culminated into the award of $9.6 billion against the nation. It is hoped that the country’s economy would not be depleted going by the welcome decision to invite the Economic and Financial Crimes Commission (EFCC), the National Intelligence Agency (NIA) and the police to look into the saga. Those found guilty should be sanctioned.

The business of governance is a serious one that should always be accorded great attention, expertise and patriotism. What has been the experience of the nation over the years is that governmental affairs have not been accorded utmost attention that could bring about desired development and good governance for the nation. Despite our modest achievements, unnecessary rivalry, poor accountability, red-tapism, nepotism, indiscipline, lack of continuity and sustainability of public policy had characterised public administration in Nigeria. We really need to get it right as a nation. The avoidable debt judgment should be reversed. This is the expectation of the people.

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